The Skinny on Options: Abstract Applications - March 29, 2021 - A Posteriori Skill

published 2 weeks ago by tastytrade, Inc.

One of the most classic debates in the world of philosophy is that of “a priori” versus “a posteriori”. Is something universally true regardless of our experience (a priori), or does something require our experience and perspective to then be validated (a posteriori)? An important distinction, indeed, and one that has a direct connection to the world of options.  While fundamental, a priori option concepts such as expiration Friday, the side of the contract, and the Black-Scholes Model are obviously important, it’s what we do with these concepts and how we apply them to our positions and portfolios in an a posteriori way is what truly matters.

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